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Principles of Risk Management and Insurance, 13th Edition by Michael McNamara, George E. Rejda

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Reinsurance

Reinsurance is another important insurance operation. This section discusses the meaning of reinsurance, the reasons for reinsurance, and the different types of reinsurance contracts.

Definitions

Reinsurance is an arrangement by which the primary insurer that initially writes the insurance transfers to another insurer (called the reinsurer) part or all of the potential losses associated with such insurance. The primary insurer that initially writes the insurance is called the ceding company. The insurer that accepts part or all of the insurance from the ceding company is called the reinsurer. The amount of insurance retained by the ceding company for its own account is called the retention limit, or net retention. The amount of insurance ...

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